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Important News From Ford Clears Path For Stock

|Includes: Ford Motor Company (F)

Ford (NYSE:F) stock has risen considerably (3.11% at time of writing) this week on news that the launch of the 2015 aluminum F-series pickups are "on schedule" for launch in the fourth quarter this year. This is significant news because a big risk in the stock comes from an unsuccessful launch of their most profitable product.

As every Ford follower knows, the new 2015 F-Series pickups are being manufactured with military grade aluminum to shed 700lbs and improve fuel economy. This can be a huge catalyst for future earnings, however a slow launch will increase costs and become a drag on earnings for this year and 2015. The F-series sales make up a large portion of total profit because of their high margins. The company has already announced increased cost will cut into earnings this year in the form of retooling plants such as the 11-week closing of its biggest F-150 plant in Dearborn, MI. Ford also needs to control costs past 2015 to insure that they can maintain the same type of margins they have enjoyed in recent years (9.9% in North America in 2013). In the first quarter 2014 earnings report, management confirmed the pre-tax profit forecast for 2014 to be between $7-$8 billion, which is less than 2013.

Another buy risk for the company is falling prices for the older 2014 models as the new models are anticipated the market. According to future CEO Mark Fields prices remained the same for the F-150 in the first quarter. However, this could change, as the new model gets closer to launch.

As the risk of a botched launch seems to have lessened, the stock has responded strongly this week. If the launch goes as planned, America's already favorite vehicle should lead pickups with the best fuel economy in the industry by a large amount, without sacrificing performance. This could lead to increased market share and increased EBITDA and earnings due to strong sales in 2015. This coupled with very strong demand in China (ytd. sales up by 39%), as well as a return to profitability in Europe in 2015 is why I am bullish on Ford.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.